Bitcoin is digital property, Ethereum is digital security

Michael Saylor. Source: UpOnly / YouTube

US-based software developer MicroStrategy CEO Michael Saylor has once again questioned the regulatory status of Ethereum (ETH), arguing that it may be better classified as a digital security. On the other hand, he insisted that there is no doubt that bitcoin (BTC) is a digital property, and therefore not subject to regulatory headaches.

Saylor, who appeared in a recent episode of UpOnly podcast, said the most important thing for a long-term crypto investor to understand is the political status of a crypto-asset – i.e., is it a cryptocurrency, of crypto property or crypto security.

“As far as I know, Bitcoin is crypto property and by ownership, that means it is considered fair and common property beyond the control of any company or group of individuals,” Saylor said, adding that it is quite difficult to create a property.

Bitcoin was created by pseudonym Satoshi Nakamoto, who published the original Bitcoin white paper in 2008. Coins are mined, which means there was never a pre-mine or initial offering of coins (ICO). Bitcoin uses the proof-of-work (PoW) mechanism, which Saylor says is “fair distribution”.

Highlighting these, Saylor asserted that bitcoin can be easily classified as digital property, saying:

“It’s pretty clear that of anything in the crypto universe, the most likely thing to be considered property in any given nation-state is Bitcoin.”

However, it has classified every coin that allows staking or uses proof-of-stake (PoS) mechanism as digital security.

“It’s been explicitly stated by regulators that if there’s a stake and it generates a return, it’s an investment contract and an investment contract is a security,” Saylor added.

Recently, there have been discussions that Ethereum is actually a security. Indeed, Ethereum was also originally funded through an ICO, which took place in 2014. Back then, users had the option of exchanging their BTC for ETH tokens, and more than 7 million ETH tokens were sold in the first 12 hours.

According to Saylor, the problem with securities is that they are in a regulatory gray area. “For you to invest in [securites]you have to be prepared to accept securities risk, legal risk, competitive risk, and literal cybersecurity risk,” he said.

This partly explains why Saylor, a bitcoin maximalist, has stayed away from ethereum despite all the recent growth around decentralized finance (DeFi) or non-fungible tokens (NFTs) which are primarily built on Ethereum.

Notably, Saylor’s microstrategy continued its BTC buying spree despite all the volatility and declines. At the end of 2021, the company held approximately 124,391 BTC, acquired at a total purchase price of $3.75 billion and an average purchase price of $30,159 per bitcoin, including fees and expenses, according to documents shared with the US Securities and Exchange Commission (SECOND).

As of 10:07 UTC, BTC is trading at USD 36,607. That’s down 3% in one day and 12% in one week. ETH changed hands at $2,444, after falling 2% in one day and 21% in one week.

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Learn more:
– MicroStrategy to continue buying Bitcoin
– MicroStrategy only HODLs Bitcoin, says CEO

– Bitcoin Mining’s energy usage is “inconsequential”, “rapidly becoming more efficient” – Saylor
– MicroStrategy and Grayscale Bitcoin Trust shares now compete with ETFs

– MicroStrategy Insider Sales Hint Leaders may lack CEO conviction
– This is how Musk and Saylor’s tweets are driving Bitcoin price

Sylvia B. Polson